Used-Truck Sales Up 17% in June as Inventories of Newer, Cheaper, Lower-Mileage Vehicles Grow

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Transport Topics  /  August 8, 2017

Sales of used heavy-duty trucks rose 17% in June as the average previously owned Class 8 truck was newer, had fewer miles and cost less than a year earlier, but concerns over excessive inventory levels remain, market analyts said.

Sales climbed to 3,495, compared with 2,990 a year earlier according to one market research firm, based on its sample of dealers, wholesalers and auctioneers as well as a few large fleets who consistently report.

“I would say it’s probably still a buyer’s market because prices are somewhat suppressed as opposed to depressed. And at the same time, the available equipment out there is very good equipment,” the analyst said.

The company uses its sample to determine average prices, age and mileage, and it encompasses about 13% of the total market, which is statistically enough to project market conditions.

By that measure, total sales in June were 26,884 compared with 23,000 a year earlier.

Year-to-date sales jumped to 163,515 compared with 136,753 in the 2016 period.

Regarding inventories, they are falling from previous highs, one fleet executive said.

The used truck market has turned 180 degrees “because there was an oversupply of tractors — probably 150,000. We know that’s gone down because we’ve seen our rental business in Penske Truck Leasing go up, because [when] guys need more equipment, they go to rental,” Roger Penske, chairman of Penske Automotive Group, said on a July 27 earnings call. “So we see that as a good news from a used truck perspective.”

Also, the average price of a used truck dropped 7% to $39,070, compared with $42,190 in June 2016.

Prices during the last nine months have been between $39,000 and $41,000

Others pointed to price stability, as well.

On a year-over-year basis, late-model trucks sold in the first six months of 2017 are averaging 5.8% lower than in the same period of 2016, according to Chris Visser, senior analyst, commercial trucks, J.D. Power Valuation Services.

“Multi-month trending shows the retail market leveling out, with depreciation quite minimal,” Visser wrote in a report. “Compared with June 2016, this average sleeper was 3 months older, had 31,123, or 6.6%, fewer miles, and brought $2,763, or 5.5%, less money,” he said.

Overall, average prices were 9.1% lower in the first half of 2017 compared with a year earlier, he said.

“The decline [in prices] certainly year-over-year has subsided some. So, there’s some talk out there that maybe the prices are bottoming out right now. There’s still a lot of inventory in the market, so we’re still focused on moving those units out,” Robert Sanchez, chairman and CEO of Ryder System Inc., said on an earnings call July 26.

“I wouldn’t say it’s really changed our outlook much yet,” he added. “Obviously, we’d have to see several quarters of stabilization of pricing and then continued volumes moving out, so our inventories come down before we change our view.”

Used truck prices are not expected to “surge” in the next two years, analyst Michael Baudendistel with Stifel, Nicolaus & Co. wrote in a note to investors.

He cited a steady supply of vehicles entering the market, “in particular a large supply of 4-year-old used trucks that should come into the marketplace in 2018 and 2019.”

At the same time, mileage fell to 453,000, compared with 465,000 a year earlier, according to ACT.

The age of the average used Class 8 truck was seven years, down slightly from seven years and one month a year earlier.

Meanwhile, one truck maker announced it has made it easier to find and buy used trucks online.

Paccar Financial Corp. redesigned its used truck website with the ability to search by make, model, truck components and mileage, plus a payment calculation tool and product walk-around videos, it said Aug. 2. The company is a unit of Paccar Inc., which manufactures the Kenworth Truck Co. and Peterbilt Motors Co. truck brands.

When additional truck inventory is received, the trucks will immediately appear in the users’ saved searches, Paccar Financial said.

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